Luxembourg at a glance
Default split
Proportional to capital
Startup entity
Société à Responsabilité Limitée (Sàrl)
Minimum capital
€12,000
Community property
Yes
Formation cost
€1,500–€3,000 (notary required)
Key legislation
Loi du 10 août 1915 sur les Sociétés Commerciales (Companies Act)
Luxembourg is a major financial center and popular for holding companies due to its extensive network of double tax treaties and favorable IP regime. The Sàrl minimum capital is €12,000 — higher than most EU countries. Formation requires notarization. Luxembourg's combined corporate tax rate (IRC, solidarity surcharge, and Municipal Business Tax) is approximately 23.87% for companies in Luxembourg City. The SIS (Société d'Impact Sociétal) is a newer entity for social enterprises.
Default partnership rules in Luxembourg
In a Luxembourg société en nom collectif (SNC, general partnership), profits are distributed proportionally to each partner's contribution by default under the 1915 Companies Act. Partners are jointly and severally liable for partnership debts. The partnership must be registered with the Registre de Commerce et des Sociétés (RCS). A partnership agreement is required.
In Luxembourg, profits are split proportionally to capital contributions by default. This means a partner who invested 80% of the capital would receive 80% of the profits. While this may seem more intuitive than the equal-split default in some countries, it still fails to account for non-cash contributions like time, expertise, and relationships. A written partnership agreement should address all types of contributions.
Société à Responsabilité Limitée (Sàrl) in Luxembourg
The Sàrl is the standard entity for Luxembourg startups. Minimum share capital is €12,000, fully paid at incorporation. Formation requires a notarial deed, costing €1,500–€3,000 total. Share transfers to non-members require approval of shareholders representing at least three-quarters of share capital. The articles of association (statuts) govern the company. A shareholders' agreement is common, especially for companies with institutional investors.
Without a shareholders' agreement, the relationship between founders is governed by the country's default rules, which rarely account for the realities of a startup — where contributions change over time and early effort often goes uncompensated. An operating agreement or shareholders' agreement is essential. Use our equity calculator to determine a fair split based on actual contributions.
What happens when a partner leaves in Luxembourg
In an SNC, a partner can withdraw according to the partnership agreement. For Sàrl companies, share transfers to non-members require three-quarters approval. Existing shareholders have pre-emption rights. Minority shareholders can petition for dissolution on just grounds.
A written agreement should address departure terms specifically, including how the buyout value is calculated, the payment timeline, vesting schedules, and any non-compete provisions. Understanding the concept of dead equity is important for managing these situations. Learn more about how dead equity affects businesses.
Marriage and business equity in Luxembourg
Luxembourg uses communauté réduite aux acquêts (community limited to acquisitions) by default, identical to the French system. Assets acquired during the marriage are community property. Pre-marital assets and inheritances remain separate. Income from separate property during the marriage becomes community property. A marriage contract (contrat de mariage) notarized by a Luxembourg notary can establish separate property.
Important for Luxembourg business owners: Luxembourg uses communauté réduite aux acquêts (community of acquisitions) by default, similar to France. Assets acquired during marriage are community property. Business owners should consider a pre-nuptial or post-nuptial agreement to protect their equity interests.
Formation and cost details
| Main startup entity | Société à Responsabilité Limitée (Sàrl) |
| Minimum capital | €12,000 |
| Formation cost | €1,500–€3,000 (notary required) |
| Default equity split | Proportional to share capital contributions |
| Default partnership split | Proportional to capital contribution |
| Community property | Yes |
| Key legislation | Loi du 10 août 1915 sur les Sociétés Commerciales (Companies Act) |
Frequently asked questions
What is the minimum capital for a Luxembourg Sàrl?
The minimum share capital is €12,000, fully paid at incorporation. Formation requires a notarial deed and costs €1,500–€3,000. This is higher than most EU countries but reflects Luxembourg's focus on established businesses.
Why do companies incorporate in Luxembourg?
Luxembourg offers an extensive double tax treaty network, favorable IP and holding company regimes, political stability, and a sophisticated legal framework. It is popular for holding structures and companies with significant IP assets.
How are partnership profits split in Luxembourg?
In an SNC (general partnership), profits are split proportionally to each partner's contribution by default. Partners are jointly and severally liable for debts.
How does Luxembourg community property affect businesses?
Under the default community of acquisitions regime, business interests acquired during marriage are community property. Even income from pre-marital separate property becomes community property. A notarized marriage contract can establish separate property.
Related resources
- Equity calculator: find a fair split for your business
- Does your small business need an equity agreement?
- Equity for small businesses: the complete guide
- Dead equity calculator: how much is yours costing you?
- Slicing Pie calculator
- What is an operating agreement?
- All 32 European countries: partnership and formation laws
- US state directory: partnership and LLC default rules
Partnership laws in neighboring countries
Disclaimer: This page provides general information about Luxembourg partnership and business formation laws and is not legal advice. Laws change, and the information here may not reflect the most recent amendments. The formation costs and capital requirements listed are approximate and may vary. Consult a qualified attorney licensed in Luxembourg for advice specific to your situation. Equity Matrix is a software tool for tracking contributions and calculating equity; it does not provide legal services.
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